Edgar Filing: PARAGON TECHNOLOGIES INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

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Paragon Technologies, Inc.
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(Name of Registrant as Specified in Its Charter)

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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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[PARAGON TECHNOLOGIES, INC. LOGO]

PARAGON TECHNOLOGIES, INC.
600 Kuebler Road, Easton, Pennsylvania 18040
Telephone (610) 252-3205

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 8, 2008

The Annual Meeting of Stockholders of Paragon Technologies, Inc., a
Delaware corporation (the "Company"), will be held at the offices of the
Company, 600 Kuebler Road, Easton, PA 18040 on August 8, 2008, at 9:30 a.m.,
local time, for the following purposes:

1. To elect five directors to the Board of Directors; and

2. To transact such other business as may properly come before the meeting
or at any adjournments thereof.

Only stockholders of record as of the close of business on June 20, 2008
will be entitled to notice of the Annual Meeting and to vote at the Annual
Meeting and any adjournments thereof. A list of stockholders of the Company
entitled to vote at the meeting will be available for inspection by a
stockholder at the Annual Meeting and during normal business hours at the
Company's corporate offices during the ten-day period immediately prior to the
Annual Meeting.

IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN AND DATE
THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID
ENVELOPE.

July 3, 2008 RONALD J. SEMANICK
Easton, Pennsylvania Secretary

[PARAGON TECHNOLOGIES, INC. LOGO]

PARAGON TECHNOLOGIES, INC.
600 Kuebler Road, Easton, Pennsylvania 18040

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 8, 2008

This Proxy Statement and the accompanying form of proxy are being mailed on
or about July 3, 2008 to the stockholders of Paragon Technologies, Inc. (the
"Company"). They are being furnished in connection with the solicitation by the
Board of Directors of proxies to be voted at the 2008 Annual Meeting of
Stockholders to be held at the offices of the Company, 600 Kuebler Road, Easton,
PA 18040 on August 8, 2008, 9:30 a.m., local time, and at any adjournments
thereof. The cost of such solicitation will be borne by the Company.

Only the holders of record of the outstanding shares of common stock of the
Company on June 20, 2008 will be entitled to vote at the Annual Meeting. A
stockholder giving a proxy may revoke it at any time by giving written notice of
such revocation to the Secretary of the Company before it is exercised. A proxy
may also be revoked by executing a later proxy or by attending the Annual
Meeting and voting in person, provided written notice of such actions are given
to the Corporate Secretary of the Company before the proxy is exercised.

At the close of business as of the above record date, there were
outstanding and entitled to vote 2,670,244 shares of the Company's common stock.
Each holder of shares entitled to vote has the right to one vote for each share
standing in the holder's name on the books of the Company.

The shares represented by each properly executed proxy will be voted in the
manner specified by the stockholder. If instructions are not given, the shares
will be voted by the persons named in the accompanying proxy for the election of
directors as specified below, and in their discretion on any other matters
properly coming before the meeting.

Under Delaware law and the Company's Bylaws, the presence, in person or by
proxy, of stockholders entitled to cast at least a majority of the votes that
all stockholders are entitled to cast will constitute a quorum for the purposes
of the Annual Meeting. Abstentions and broker non-votes will be treated as
present for purposes of determining the presence of a quorum. Directors are
elected by a plurality of the votes cast at the meeting. Accordingly, directions
to withhold authority, abstentions, and broker non-votes will have no effect on
the outcome of the vote for the election of directors.

July 3, 2008

QUESTIONS AND ANSWERS
ABOUT THE ANNUAL MEETING

Why am I receiving this proxy statement and proxy card?
You are receiving a proxy statement and proxy card because you own shares
of our common stock. This proxy statement and proxy card relates to the
Company's 2008 Annual Meeting of Stockholders to be held on August 8, 2008 and
at any adjournment of that meeting. This proxy statement describes the matters
on which we would like you, as a stockholder, to vote. It also gives you
information on these matters so that you can make an informed decision.

What information is contained in this proxy statement?
The information included in this proxy statement relates to the election of
five members of the Board of Directors to be voted on at the Annual Meeting,
procedures for voting at the Annual Meeting, and other information required by
federal securities laws.

Who is soliciting my proxy?
The Board of Directors is soliciting your proxy for use at the Annual
Meeting.

What am I voting on?
You are voting for the election of five members of the Board of Directors
and any other matter brought before the meeting in accordance with law and our
bylaws.

Who is entitled to vote?
Holders of shares of common stock outstanding on the Company's books at the
close of business on June 20, 2008, the record date for the Annual Meeting, may
vote. There were 2,670,244 shares of common stock outstanding at that time.

How many votes do I have?
You have one vote for each share of common stock you hold as of the record
date for the Annual Meeting.

What vote is required to elect directors?
The Board of Directors are elected by a plurality of votes, which means
that the five nominees receiving the highest number of votes will serve as
members of the Board of Directors until their successors have been elected and
qualified.

Can I make a nomination?
You cannot make a nomination for this Annual Meeting of Stockholders.
Nominations of directors which are intended to be presented at the 2009 Annual
Stockholders' Meeting must be received by the Company no later than March 6,
2009, in order to be included in the 2009 proxy materials.

With respect to nominations of directors not included in the Company's
proxy statement, the stockholder must give advance notice to the Company prior
to the deadline for such meeting determined in accordance with the Bylaws (the
"Bylaw Deadline"). Under the Company's Bylaws, in order to be deemed properly
presented, notice must be delivered to the Secretary of the Company at the
principal executive offices of the Company no less than 90 days nor more than
120 days prior to the first anniversary of the preceding year's Annual Meeting.
If the date of next year's Annual Meeting is earlier than July 9, 2009 or later
than October 7, 2009, however, your written notice of intent must be delivered
between the 120th day before next year's Annual Meeting and the later of the
90th day before next year's Annual Meeting, or the 10th day after the Company's
first public announcement of next year's Annual Meeting date. The stockholder's
notice must set forth the information required by the Bylaws.

QUESTIONS AND ANSWERS
ABOUT THE ANNUAL MEETING
(Continued)

The Nominating Committee will consider nominees for election to the Board
that are timely recommended by stockholders provided that a complete description
of the nominees' qualifications, experience and background, together with a
statement signed by each nominee in which he or she consents to act as such,
accompany the recommendations. Such recommendations should be submitted in
writing to the attention of Chairman, Nominating Committee, at the Company's
address at Paragon Technologies, Inc., 600 Kuebler Road, Easton, PA 18040, and
should not include self-nominations.

Section 2.1.2 of the Company's Bylaws contains provisions setting forth the
requirements applicable to a stockholder nomination for director. These
requirements are summarized in this Proxy Statement under the caption "2009
Stockholder Proposals."

How do I vote?
After carefully reading and considering the information contained in this
proxy statement, you may cast your vote in one of the following ways:
o by completing the accompanying proxy card and returning it in the
enclosed envelope; or
o by appearing and voting in person at the Annual Meeting.
If your shares are held in "street name," which means that your shares are
held in the name of a bank, broker, or other financial institution instead of in
your own name, you must either direct the financial institution as to how to
vote your shares or obtain a proxy from the financial institution to vote at the
Annual Meeting.

What if I don't indicate my voting choices?
If the Company receives your proxy in time to permit its use at the Annual
Meeting, your shares will be voted in accordance with the instructions you
indicate. If you do not indicate instructions and have not indicated otherwise,
your shares will be voted as recommended by Paragon's Board of Directors. More
particularly, your shares will be voted FOR the election of the director
nominees listed in this proxy statement.

How does discretionary voting apply?
The Company is not aware of any matter that will be properly presented for
consideration at the Annual Meeting other than what is described in this proxy
statement. If another matter is properly presented, your shares will be voted on
the matter in accordance with the judgment of the person or persons voting the
proxy.

May I change my vote?
After mailing in your proxy, you may change your vote by following any of
these procedures. If you are a stockholder "of record," meaning that the shares
you own are registered in your name as of June 20, 2008, then to revoke your
proxy, you must do one of the following before the vote is taken at the Annual
Meeting:
o send written notice revoking your proxy to the Corporate Secretary at
Paragon Technologies, Inc., 600 Kuebler Road, Easton, PA 18040; or
o sign and return a proxy with a later date.
If you are not a holder of record but you are a "beneficial holder,"
meaning that your shares are registered in another name (for example, in "street
name"), you must follow the procedures required by the holder of record, which
is usually a brokerage firm, bank, or other financial institution, to revoke a
proxy. You should contact the holder of record directly for more information on
these procedures. In any event, you may not change your vote or revoke your
proxy after the vote is taken at the Annual Meeting.

QUESTIONS AND ANSWERS
ABOUT THE ANNUAL MEETING
(Continued)

If you are not a holder of record but you are a "beneficial holder,"
meaning that your shares are registered in another name (for example, in "street
name"), you must follow the procedures required by the holder of record, which
is usually a brokerage firm, bank, or other financial institution, to revoke a
proxy. You should contact the holder of record directly for more information on
these procedures. In any event, you may not change your vote or revoke your
proxy after the vote is taken at the Annual Meeting.

How do I vote in person?
If you plan to attend the Annual Meeting and wish to vote in person, we
will give you a ballot when you arrive. If your shares are held in "street
name," you must bring a letter from the brokerage firm or bank showing that you
were the beneficial owner of the shares on June 20, 2008, the record date for
determining which of our stockholders are entitled to notice of, and to vote at,
the Annual Meeting, in order to vote at the Annual Meeting. In addition, if you
want to vote your shares that are held in street name, you must obtain a "legal
proxy" from the holder of record and present it at the Annual Meeting.

How does the Board of Directors recommend that I vote?
The Board of Directors recommends that you vote "FOR" each of the director
nominees.

What does it mean if I receive more than one set of proxy materials?
Receiving multiple sets of proxy soliciting materials generally means that
your shares are registered in different ways or are held in more than one
account. Please respond to all of the proxy requests to ensure that all your
shares are voted.

What constitutes a quorum at the Annual Meeting?
A majority of the outstanding shares entitled to vote on a matter, whether
present in person or by proxy, constitutes a quorum for consideration of that
matter at the Annual Meeting. A quorum is necessary for valid action to be taken
on the matter. Your shares will be present by proxy and count towards the quorum
if you give us your proxy by signing, dating, and returning a proxy form. As a
result, it is important that you return your proxy.

Who counts the votes?
Representatives of our Transfer Agent, American Stock Transfer and Trust
Company, will tabulate the votes.

Who pays the costs of soliciting proxies?
The Company will pay all the costs of soliciting management proxies.
Brokerage firms, custodians, nominees, fiduciaries, and other intermediaries are
being asked to forward the proxy soliciting materials to beneficial owners of
the Company's common stock and to obtain their authority to give proxies. The
Company will reimburse these intermediaries for their reasonable expenses upon
request. Alternatively, the Company may engage a proxy solicitation firm to
distribute the proxy soliciting materials. If applicable, the Company will
compensate such proxy soliciting firm for all fees and costs associated with its
distribution of the proxy soliciting materials.

In addition to mailing proxy soliciting materials, the Company's directors,
officers, and regular employees may solicit proxies personally, by telephone, or
by other means. They will not receive additional compensation for these
services, other than normal overtime pay, if applicable. Representatives of the
Company's transfer agent may also solicit proxies.

SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information as of June 20, 2008
(unless otherwise noted) regarding the ownership of common stock (i) by each
person known by the Company to be the beneficial owner of more than five percent
(5%) of the outstanding common stock, (ii) by each director or nominee for
election as a director of the Company, (iii) by the executive officers of the
Company named in the Summary Compensation Table (included elsewhere in this
Proxy Statement), and (iv) by all current executive officers and directors of
the Company as a group. Unless otherwise stated, the beneficial owners exercise
sole voting and/or investment power over their shares.

Amount and Right to Acquire
Nature of Under Options
Name and Address of Beneficial Exercisable Percent of
Title of Class Beneficial Owner (1) Ownership Within 60 Days Class (2)
----------------------- ------------------------------------------------------ ------------------- -------------

Common Stock, Emerald Advisers, Inc. (3) 217,590 - 8.1
Par Value 1703 Oregon Pike
$1.00 Per Share Suite 101
Lancaster, PA 17601

Common Stock, L. Jack Bradt (4) 170,324 - 6.4%
Par Value 580 Riverwoods Way
$1.00 Per Share Bethlehem, PA 18018

Common Stock, Ronald J. Izewski (5) 1,000 - *
Par Value
$1.00 Per Share

Common Stock, Theodore W. Myers (6) 26,200 - *
Par Value
$1.00 Per Share

Common Stock, Robert J. Schwartz (5) 85,019 - 3.2%
Par Value
$1.00 Per Share

Common Stock, Samuel L. Torrence 6,000 - *
Par Value
$1.00 Per Share

Common Stock, Leonard S. Yurkovic 19,000 - *
Par Value
$1.00 Per Share

Common Stock, Ronald J. Semanick (7) 17,370 1,250 *
Par Value
$1.00 Per Share

Common Stock, William J. Casey (7) 2,500 1,250 *
Par Value
$1.00 Per Share

Common Stock, John F. Lehr (7) 2,500 1,250 *
Par Value
$1.00 Per Share

Common Stock, All current directors and
Par Value executive officers as a group
$1.00 Per Share (8 persons) (6) (7) 159,589 3,750 6.1%

--------------------------------------
*Represents less than 1%.

SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
(Continued)

(1) Unless otherwise indicated, the address for each stockholder listed on the
table is c/o Paragon Technologies, Inc., 600 Kuebler Road, Easton,
Pennsylvania 18040.

(2) The percentage for each individual, entity or group is based on the
aggregate number of shares outstanding as of June 20, 2008 (2,670,244) and
all shares issuable upon the exercise of outstanding stock options held by
each individual or group that are presently exercisable or exercisable
within 60 days after June 20, 2008.

(3) This information is presented in reliance on information disclosed in a
Schedule 13G/A filed with the Securities and Exchange Commission on
February 1, 2008.

(4) Includes 51,262 shares held by members of Mr. Bradt's immediate family. Mr.
Bradt disclaims beneficial ownership of such shares. Mr. Bradt has 161,000
shares pledged as security for loans. Mr. Bradt retired from the Company's
Board of Directors in August 2007.

(5) Messrs. Izewski and Schwartz were elected to the Board of Directors of the
Company, effective April 18, 2008.

(6) Includes 2,800 shares held by members of Mr. Myers' immediate family. Mr.
Myers disclaims beneficial ownership of such shares.

(7) Includes nonvested shares awarded on March 8, 2006 under the Company's 1997
Equity Compensation Plan to Messrs. Semanick (2,500 shares), Casey (2,500
shares), and Lehr (2,500 shares). The nonvested stock grants vest on March
8, 2010, the four-year anniversary of the date of grant.

ELECTION OF DIRECTORS

During 2007, the Board of Directors adopted the following policy with
respect to directors standing for election: All members of the Board of
Directors shall retire upon attaining seventy-five (75) years of age. The
resignation of a member of the Board of Directors shall take effect at the
expiration of said individual's then current term of office.

At the meeting, five nominees will stand for election as directors of the
Company to hold office for a period of one year or until their successors have
been elected and qualified.

If the enclosed proxy is duly executed and received in time for the
meeting, the persons named therein will vote the shares represented thereby for
the five persons nominated for election as directors unless authority is
withheld.

If any nominee should refuse or be unable to serve, the proxy will be voted
for such other person as shall be designated by the Board of Directors.
Management has no knowledge that any of the nominees will refuse or be unable to
serve.

Information concerning the nominees for election as directors is set forth
below:

Name, Other Positions or Offices With The Company Director Age
and Principal Occupation for Past Five Years Since
------------------------------------------------------------------------- ------------ -------

Ronald J. Izewski....................................................... 2008 51

Ronald J. Izewski currently serves as the Senior Vice President ("SVP")
and Chief Financial Officer ("CFO") of Just Born, Inc., a privately owned
confectionery manufacturer of jellybeans, marshmallows, and other candy
products. Mr. Izewski joined Just Born in 1995 as Vice President of the
Finance Division, assumed the role of CFO in 2002, and was promoted to
SVP/CFO in 2007. From 1984 to 1995, Mr. Izewski held several financial
leadership positions, including Vice President and General Manager of the
Donruss Trading Cards Division, at the Leaf Candy Company. From 1978 to
1984, Mr. Izewski was an Audit Supervisor in the Chicago, Illinois office
of Coopers & Lybrand, a public accounting firm.

Theodore W. Myers....................................................... 2002 64

Theodore W. Myers is the Chairman of the Board of the Company, a
position he has held since June 2002. Mr. Myers retired from Tucker
Anthony Sutro, an investment banking firm, where he was First Vice
President and Branch Manager of the Phillipsburg, New Jersey satellite
office, where he served from 1991 to 2000.

Robert J. Schwartz...................................................... 2008 70

Robert J. Schwartz is the founder and President of Land Equity Inc.,
a real estate firm located in Lebanon, New Jersey. For over 30
years, Land Equity Inc. has specialized in commercial and industrial
land sales. Mr. Schwartz began his career in real estate in 1967
and has established his company in key markets of Massachusetts, New
Jersey, Pennsylvania, and Maryland.

Samuel L. Torrence...................................................... 2007 57

Samuel L. Torrence retired as President of Just Born, Inc. on June 30,
2008, a position he held since 2005. Just Born is a privately owned
confectionery manufacturer of jellybeans, marshmallows, and other candy
products. Mr. Torrence joined Just Born in 2002 as Executive Vice
President. From 1993 to 2001, Mr. Torrence held several executive-level
positions, including Executive Vice President of Human Resources and
Administration, Executive Vice President of Administration & Parts
Operations, Senior Vice President of Total Quality Management, and Vice
President of Human Resources and Total Quality Management, at Mack Trucks,
Inc., a manufacturer of heavy- and medium-duty trucks for use in a variety
of industries.

Leonard S. Yurkovic..................................................... 2002 70

Leonard S. Yurkovic returned to the Company as Acting CEO on March 1,
2007. Mr. Yurkovic started with the Company in 1979 as Vice President -
Finance. Throughout the 1980s, Mr. Yurkovic was appointed to several
executive-level positions at the Company, having been named President and
Chief Operating Officer in 1985, Managing Director of European Operations
in 1987, and then President and CEO in 1988. Mr. Yurkovic initially
retired from the Company as CEO and a member of the Board of Directors in
1999. Mr. Yurkovic returned to the Company as President and CEO in October
2003 and retired from the Company as President and CEO on December 31,
2005.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
FIVE NOMINEES AS DIRECTORS OF THE COMPANY.

------------------------------

ADDITIONAL INFORMATION CONCERNING CERTAIN
DIRECTORS AND COMMITTEES

The Board of Directors performs certain of its functions through
committees. Set forth below is description of the functions of those committees
and the members of the Board serving on such committees.

There are three standing committees of the Board of Directors: the Audit
Committee, the Compensation Committee, and the Nominating Committee. The
following table lists the current members of each committee:

--------------------------------------------------------------------------------------------------
Audit Compensation Nominating
Committee Committee Committee
--------------------------------------------------------------------------------------------------

Ronald J. Izewski (Chair) Samuel L. Torrence (Chair) Theodore W. Myers (Chair)
Theodore W. Myers Theodore W. Myers Samuel L. Torrence
Robert J. Schwartz Robert J. Schwartz
--------------------------------------------------------------------------------------------------

Audit Committee
---------------
The Audit Committee has adopted a formal written Charter that has been
approved by the Board. The Charter specifies the scope of the Audit Committee's
responsibilities and procedures for carrying out such responsibilities. A copy
of the Charter is attached as Appendix C to this Proxy Statement.

The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial reports and other financial information provided by the Company to any
governmental body or the public, the Company's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board of Directors have established, and the Company's accounting and
financial reporting processes generally. Consistent with this function, the
Audit Committee encourages continuous improvement of, and fosters adherence to
the Company's policies, procedures, and practices at all levels. The Audit
Committee's primary duties and responsibilities are to serve as an independent
and objective party to monitor the Company's financial reporting process and
internal control system, review and appraise the audit efforts of the Company's
independent registered public accountants, and provide an open avenue of
communication among the independent registered public accountants, financial and
senior management, and the Board of Directors. The Audit Committee approves the
engagement of the independent registered public accountants and also approves
the scope of the annual audit and any non-audit services provided by such
independent registered public accountants. It reviews with the independent
registered public accountants the results of the review of the quarterly
financial statements, the annual audit, and the year-end financial statements.

During the fiscal year ended December 31, 2007, the Audit Committee was
comprised of Mr. Schweiger, Chairman, and Messrs. Blyskal, Bradt, and Myers. Mr.
Blyskal became a member of the Audit Committee in March 2007. Mr. Bradt, a
former director of the Company, served on the Audit Committee until his
retirement in August 2007. Messrs. Blyskal and Schweiger served on the Audit
Committee until their resignations from the Board of Directors in April 2008, at
which time Messrs. Izewski and Schwartz became members of the Audit Committee.
The current members of the Audit Committee are Mr. Izewski, Chairman, and
Messrs. Myers and Schwartz. Each of the members of the Audit Committee is
considered "independent" within the meaning of the rules of the American Stock
Exchange and the Securities and Exchange Commission. The Board of Directors has
further determined that all of the Audit Committee members are "financially
literate," and that based on Mr. Izewski's education and qualifications as a
certified public accountant, his experience as a chief financial officer and
audit

supervisor, and his professional experience, Mr. Izewski is an "audit committee
financial expert" within the meaning of the rules of the Securities and Exchange
Commission and, therefore, Mr. Izewski qualifies as a financially sophisticated
audit committee member within the meaning of the rules of the American Stock
Exchange. No member of the Audit Committee simultaneously serves on the audit
committees of more than three public companies.

Compensation Committee
----------------------
The Compensation Committee has adopted a formal written Charter that has
been approved by the Board. The Charter specifies the scope of the Compensation
Committee's responsibilities and procedures for carrying out such
responsibilities. A copy of the Charter is attached as Appendix A to this Proxy
Statement. The Compensation Committee reviews and recommends to the Board of
Directors matters with respect to the remuneration arrangements for officers and
directors of the Company including salaries and other direct compensation,
restricted and nonvested stock grants, and incentive stock option awards. During
the fiscal year ended December 31, 2007, the Compensation Committee was
comprised of Mr. Torrence, Chairman, and Messrs. Bradt, Myers, and Schweiger.
Mr. Torrence became a member of the Compensation Committee in March 2007 and
Chairman of the Compensation Committee in August 2007. Mr. Schweiger served as
Chairman of the Compensation Committee until August 2007, at which time Mr.
Torrence became Chairman of the Compensation Committee. Mr. Bradt, a former
director of the Company, served on the Compensation Committee until his
retirement in August 2007. Mr. Schweiger served on the Compensation Committee
until his resignation from the Board of Directors in April 2008, at which time
Mr. Schwartz became a member of the Compensation Committee. The current members
of the Compensation Committee are Mr. Torrence, Chairman, and Messrs. Myers and
Schwartz.

Committee on Strategic Alternatives
-----------------------------------
The Board of Directors disbanded the Committee on Strategic Alternatives in
August 2007. The Board decided that given its current size and composition, a
separate committee was no longer appropriate to assess alternative uses of
capital and study strategic alternatives to enhance stockholder value. Rather,
the entire Board would work together to provide an expanded and ongoing effort
to enhance stockholder value. The members of the Committee on Strategic
Alternatives during the year ended December 31, 2007 were Mr. Myers, Chairman,
and Messrs. Blyskal, Bradt, Schweiger, and Yurkovic. Mr. Blyskal became a member
of the Committee on Strategic Alternatives in March 2007. Mr. Bradt, a former
director of the Company, served on the Committee on Strategic Alternatives until
his retirement in August 2007.

The Company is currently exploring various business strategies designed to
enhance the value of the Company's assets for its stockholders. The Company is
continuing to evaluate and actively explore a range of possible options,
including transactions intended to provide liquidity and maximize stockholder
value, and consideration of the acquisition of complementary assets and/or
businesses. The Company may not be able to effect any of these strategic
options.

Nominating Committee
--------------------
The Nominating Committee has adopted a formal written Charter that has been
approved by the Board. The Charter specifies the scope of the Nominating
Committee's responsibilities and procedures for carrying out such
responsibilities. A copy of the Charter is available on the Company's website,
www.ptgamex.com, and is also attached as Appendix B to this Proxy Statement.
During the fiscal year ended December 31, 2007, the Nominating Committee was
comprised of Mr. Myers, Chairman, and Messrs. Bradt and Schweiger. Mr. Bradt, a
former director of the Company, served on the Nominating Committee until his
retirement in August 2007. Mr. Schweiger served on the Nominating Committee
until his resignation from the Board of Directors in April 2008, at which time
Mr. Torrence became a member of the Nominating Committee. The current members of
the Nominating Committee are Mr. Myers, Chairman, and Mr. Torrence, each of whom
is independent, as that term is defined in the listing standards of the American
Stock Exchange.

The Nominating Committee functions include establishing the criteria for
recommending candidates to the Board for nomination; actively seeking candidates
who meet those criteria; and making recommendations to the Board of nominees to
fill vacancies on, or as additions to, the Board.

The Nominating Committee has not established specific, minimum
qualification standards for nominees to the Board. From time to time, the
Nominating Committee may identify certain skills or attributes (e.g., material
handling industry experience, technology/ information/data systems experience,
financial experience, sales and marketing experience, independence, character,
leadership) as being particularly desirable for specific director nominees.

In the case of potential independent director candidates, such eligibility
criteria shall be in accordance with Securities and Exchange Commission and
American Stock Exchange rules.

The Nominating Committee will conduct an annual assessment of the
composition of the Board and its committees and review with the Board the
appropriate skills and characteristics required of Board members. The Nominating
Committee may, in the future, rely upon third-party search firms to identify
Board candidates. The Nominating Committee also expects to rely upon
recommendations from a wide variety of its business contacts, including current
executive officers, directors, community leaders, and stockholders as a source
for potential board candidates.

The Nominating Committee has sole authority to retain and terminate any
search firm to be used to identify director candidates, including sole authority
to approve the search firm, fees, and other retention terms. The Nominating
Committee has not engaged, or paid any fees to, a search firm in connection with
the nomination of any of the directors for election at the Annual Meeting of
Stockholders covered by this Proxy Statement; however, during 2006, the
Nominating Committee engaged HFC Executive Search, a third party search firm to
identify potential Board candidates to be considered for election to the Board.
With the assistance of HFC Executive Search in identifying viable candidates to
serve as directors of the Company and based on the recommendation of the
Nominating Committee, Messrs. Blyskal and Torrence were elected to the Board of
Directors of the Company, effective February 1, 2007. Fees paid to HFC Executive
Search for professional services rendered during the year ended December 31,
2006 in connection with identifying viable Board candidates totaled
approximately $56,000.

Each of the current nominees for director listed under the caption
"ELECTION OF DIRECTORS" is an existing director standing for re-election. In
connection with the 2008 Annual Meeting of Stockholders, the Nominating
Committee did not receive any recommendation for a candidate from any
stockholder or group of stockholders owning more than 5% of the Company's common
stock.

------------------------------

There were six meetings of the Audit Committee, three meetings of the
Compensation Committee, two meetings of the Committee on Strategic Alternatives,
and three meetings of the Nominating Committee during the year ended December
31, 2007. Also, the entire Board continues to work together to provide an
expanded and ongoing effort relating to the responsibilities of the Committee on
Strategic Alternatives. The Board of Directors met eight times during the year
ended December 31, 2007. Each director attended all of the meetings of the Board
of Directors and committees of the Board of Directors on which he served.

Independent directors meet in executive session (where no members of
management shall be present) at least once annually.

With the exception of Mr. Yurkovic, the Company's Acting CEO, each of the
members of the Company's Board of Directors is considered "independent" within
the meaning of the rules of the American Stock Exchange and the Securities and
Exchange Commission.

Communication with Directors
----------------------------
The Company's Annual Meeting of Stockholders provides an opportunity each
year for stockholders to ask questions of or otherwise communicate directly with
members of the Company's Board of Directors on matters relevant to the Company.
Each of the Company's directors is requested to personally attend the Annual
Meeting of Stockholders. All of the Company's directors attended the Company's
2007 Annual Meeting of Stockholders and are expected to attend the 2008 Annual
Meeting of Stockholders. In addition, stockholders may, at any time, communicate
in writing with the Chairman of the Nominating Committee, or non-management
directors as a group, by sending such written communication to the attention of
Chairman, Nominating Committee, at the Company's address at Paragon
Technologies, Inc., 600 Kuebler Road, Easton, PA 18040, (fax (610) 252-3102).

Copies of written communications received at such address will be provided
to the Chairman of the Nominating Committee or the non-management directors as a
group unless such communications are considered, in the reasonable judgment of
the Corporate Secretary, to be improper for submission to the intended
recipient(s). Examples of stockholder communications that would be considered
improper for submission include, without limitation, customer complaints,
solicitations, communications that do not relate directly or indirectly to the
Company or the Company's business, or communications that relate to improper or
irrelevant topics.

------------------------------

COMPENSATION OF DIRECTORS

Directors who are also employees of the Company receive no additional
remuneration for their services as directors. The Chairman of the Board of
Directors and other non-employee directors receive an annual retainer of $24,000
and $12,000, respectively; a fee of $1,500 for each Board meeting attended; a
fee of $600 per day for all Company-related activities undertaken at the request
of the Chairman of the Board or the Chief Executive Officer of the Company; and
a fee of $300 per interview for all Company-related activities undertaken in
connection with interviewing qualified candidates to fill vacancies in key
positions within the Company.

The Chairman of the Audit Committee receives an annual retainer of $5,000,
and directors are paid for serving on Committees of the Board of Directors.
Non-employee directors serving on Committees of the Board of Directors receive
meeting fees of $1,500 for Audit Committee Meetings and $1,000 for all other
Committee Meetings of the Board of Directors. Directors are also reimbursed for
their customary and usual expenses incurred in attending Board and Committee
Meetings including those for travel, food, and lodging.

DIRECTOR COMPENSATION TABLE
FOR THE YEAR ENDED DECEMBER 31, 2007
----------------------------------------------------------------------------------------------------------------------------------
Change in
Pension Value
and
Fees Nonqualified
Earned or Non-Equity Deferred
Paid in Stock Option Incentive Plan Compensation All Other
Cash Awards Awards Compensation Earnings Compensation Total
Name ($) ($) ($) ($) ($) ($) ($)
----------------------------------------------------------------------------------------------------------------------------------

Robert J. Blyskal $ 29,000 - - - - - $ 29,000
L. Jack Bradt (1) 22,000 - - - - - 22,000
Theodore W. Myers 45,000 - - - - - 45,000
Anthony W. Schweiger 38,000 - - - - - 38,000
Samuel L. Torrence 31,400 - - - - - 31,400
Leonard S. Yurkovic (2) 2,000 - - - - - 2,000
-----------------------------------------------------------------------------------------------------
Total $ 167,400 - - - - - $ 167,400
=====================================================================================================
----------------------------------------------------------------------------------------------------------------------------------

(1) Mr. Bradt served on the Board of Directors of the Company until his
retirement from the Board of Directors in August 2007.

(2) Mr. Yurkovic received compensation for director's fees prior to his
appointment as Acting CEO of the Company on March 1, 2007. He is not
eligible for director compensation while in this position.

------------------------------

Options outstanding at December 31, 2007 pertaining to the Company's
directors are as follows:

----------------------------------------------------------------------------------------------------------
Number of Number of
Securities Securities
Underlying Underlying
Unexercised Unexercised
Options Options Option
(#) (#) Exercise Option
Grant --------------------------------- Price Expiration
Name Date Exercisable Unexercisable ($) Date
---------------------------------------------------------------------------------------------------------

Robert J. Blyskal - - - - -
Theodore W. Myers - - - - -
Anthony W. Schweiger - - - - -
Samuel L. Torrence - - - - -
Leonard S. Yurkovic - - - - -
---------------------------------------------------------------------------------------------------------

There are no options outstanding at December 31, 2007 pertaining to the
Company's directors.

------------------------------

NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE FOLLOWING REPORTS OF THE AUDIT
COMMITTEE AND THE COMPENSATION COMMITTEE AND THE STOCK PERFORMANCE GRAPH ON PAGE
29 SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE EXCHANGE ACT, EXCEPT TO THE
EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE,
AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors assists the Board in
fulfilling its oversight responsibilities. The Board has determined that each of
the members of the Audit Committee is "independent," as that term is defined in
the independence requirements for Audit Committee members contained in the
applicable rules of the Securities and Exchange Commission and standards of the
American Stock Exchange. The Audit Committee acts under a Charter adopted by the
Board. A copy of the Charter is attached to this Proxy Statement as Appendix C.

Management is responsible for the Company's internal controls and the
financial reporting process. KPMG LLP, the Company's independent registered
public accountants, is responsible for performing an independent audit of the
Company's consolidated financial statements in accordance with standards of the
Public Company Accounting Oversight Board (United States) and to issue a report
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes.

In performing these responsibilities, the Audit Committee reviewed and
discussed the Company's audited consolidated financial statements with
management and KPMG LLP. The Audit Committee discussed with KPMG LLP matters
required to be discussed by all relevant professional and regulatory standards.
KPMG LLP also provided to the Audit Committee the letter and written disclosures
required by all relevant professional and regulatory standards, and the Audit
Committee discussed with KPMG LLP the matter of the firm's independence.

Based on the review and discussions described above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2007, as filed with the Securities and Exchange Commission.

Current Members of the Audit Committee: Former Members of the Audit Committee:
Ronald J. Izewski, Chairman Robert J. Blyskal
Theodore W. Myers L. Jack Bradt
Robert J. Schwartz Anthony W. Schweiger

Mr. Bradt, a former director of the Company, served on the Audit Committee
until his retirement in August 2007. Messrs. Blyskal and Schweiger, former
directors of the Company, served on the Audit Committee until their resignations
in April 2008, at which time Messrs. Izewski and Schwartz became members of the
Audit Committee.

------------------------------

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is currently comprised of Mr. Torrence, Chairman, and
Messrs. Myers and Schwartz. Mr. Torrence became a member of the Compensation
Committee in March 2007 and Chairman of the Compensation Committee in August
2007. Mr. Bradt, a former director of the Company, served on the Compensation
Committee until his retirement in August 2007. Mr. Bradt was formerly the CEO of
the Company until his retirement from that position in 1987. Mr. Schweiger, a
former director of the Company, served on the Compensation Committee until his
resignation in April 2008, at which time Mr. Schwartz became a member of the
Compensation Committee. No executive officer of the Company serves as a member
of the Board of Directors or Compensation Committee of any entity that has one
or more executive officers serving as a member of the Company's Board of
Directors or Compensation Committee.

COMPENSATION DISCUSSION AND ANALYSIS

1. Executive Compensation Program Philosophies and Objectives
----------------------------------------------------------

Paragon's executive compensation program is based on the following
philosophies and objectives:

o The Compensation Committee (for purposes of this Executive Compensation
section, the "Committee") of the Board of Directors is responsible for
establishing the Company's executive compensation program, subject to
final approval by the Company's Board of Directors;

o The executive compensation program should enable Paragon to attract,
retain, and motivate individuals with the skills and talent necessary
to provide a meaningful contribution to Paragon while reinforcing
Paragon's culture and desired behaviors;

o The executive compensation program should remain competitive with
industry and similar sized company compensation programs. To that end,
the program should provide "median rewards for median performance" and
"superior rewards for superior performance" when measured against
appropriate Company targets and comparative groups;

o Accountability for performance is essential in aligning an executive's
interest with those of Paragon's stockholders. Therefore, an
executive's compensation package should be largely based on the
Company's achievement of specified financial and stockholder return
objectives as well as the executive's achievement of specified
individual objectives;

o The executive compensation program should take into account internal
equity among the executive officer group. Equity ownership is viewed as
a critical component to assure that the executives' Company financial
interests are closely aligned with those of the Company stockholders;

o Executive compensation should be delivered in a mixture of base salary,
cash incentive, and health and welfare programs that are effective in
retaining high performing executive officers while motivating them to
achieve current year business objectives as well as to deliver
long-term goals; and

o The executive compensation program should promote collaboration and
teamwork across the Company.

The Committee selects compensation elements for its executive compensation
program with these philosophies and objectives in mind. The executive
compensation program reflects that the Company operates with a small team of
executives. The executives are given significant and extensive responsibilities
that encompass both the Company's strategic plan and direct day-to-day
activities in sales, finance, customer communications, product development,
marketing, manufacturing, and other similar activities. Additionally, the
Committee regularly reviews overall Company performance and individual executive
contributions, performance, leadership traits, and representation of the
Company.

Although the Committee believes that employment contracts do not ensure or
guarantee that executives' efforts, attention, and commitment are aligned with
maximizing the success of the Company and stockholder value, it is recognized
that under certain circumstances these contracts are necessary. Currently, there
are no employment contracts with any of the executives. The Committee continues
to be diligent in considering when employment contracts are necessary and in the
best interest of the Company and the Company's stockholders.

2. Executive Compensation Program Process and Oversight
----------------------------------------------------

The Committee provides advice, direction, and oversight responsibility for
the compensation and human resources programs, processes, and functions of
Paragon, including establishing a mandatory retirement age for executives and
directors. The Committee has the sole authority at the Company's expense, to
engage and terminate consulting firms and legal counsel, as the Committee deems
advisable, to advise the Committee with respect to executive compensation and
human resource matters, including the sole authority to approve the consultant's
fees and other engagement terms.

Paragon's Board of Directors has delegated to the Committee the following
responsibilities and authority:

o The Committee is responsible for developing and endorsing the executive
compensation program philosophies and objectives discussed above;

o With respect to Paragon's Chief Executive Officer ("CEO"), the
Committee:

- Reviews and approves corporate goals and objectives relevant to
the compensation of the CEO, annually evaluates the CEO's
performance in light of these goals and objectives, and
communicates the results to the CEO and the full Board;

- Recommends (for approval by the independent directors) the CEO's
compensation levels (including base salary, cash incentive
compensation, and other direct and indirect benefits) based on its
evaluation of the CEO; and

- Considers, among other items, Paragon's performance and relative
stockholder return and the value of total compensation to CEO's at
comparable companies.

o The Committee approves compensation for all executives below the level
of CEO, including, if applicable, new and amended employment and
severance agreements for these executives;

o The Committee assists the Board of Directors in establishing and
periodically updating appropriate base salary and cash incentive
compensation;

o The Committee administers these plans in order to attract, retain, and
motivate skilled and talented executives and to align such plans with
Paragon's financial performance, business strategies, and growth in
stockholder value;

o The Committee provides necessary determinations in connection with
executive compensation to qualify for tax deductions in excess of
limitations under applicable regulations, including section 162(m) of
the Internal Revenue Code as applicable; and

o The Committee guides the Board of Directors regarding all elements of
appropriate director compensation and human resource matters, including
establishing appropriate retirement policies.

The Committee recognizes the importance of maintaining sound principles for
the development and administration of executive compensation and benefit
programs and has taken steps that significantly enhance the Committee's ability
to effectively carry out its responsibilities and ensure that Paragon's
compensation and benefit programs further the philosophies and objectives set
forth above. Among other things, the Committee has taken the following actions:

(1) retained Aon Consulting ("Aon"), independent compensation consultant,
in 2005 to advise the Committee on executive compensation and reward
issues; and

(2) implemented a more robust executive performance management process,
including annual management-based objectives ("MBOs"), which are
reviewed and approved by the Committee, to strengthen the link between
executive pay and performance.

Management's participation in the compensation process is critical in
creating an equitably tailored program that is both effective in motivating the
executive team and in ensuring that the process appropriately reflects Paragon's
culture and current strategies. Each year, Paragon's executives are required to
develop a new set of MBOs for themselves and their respective areas of
responsibility, consisting of both qualitative and quantitative goals. They are
also required to review them with Paragon's CEO. These MBOs must be approved by
the CEO and serve as a basis for measuring the amount of cash incentive awards
to which each executive is entitled. The process and timing for setting these
objectives and assessing performance against these objectives are discussed in
detail below.

The Committee uses the following resources, processes, and procedures to
help it effectively perform its responsibilities:

o Executive sessions, without management present, to discuss various
compensation matters, including the compensation of the CEO;

o Executive sessions with the CEO present to discuss recommendations of
the CEO pertaining to executive compensation;

o An independent executive compensation consultant who advises the
Committee from time to time on compensation matters; and

o A periodic review of all executive compensation and benefit programs
for competitiveness, reasonableness, and cost-effectiveness.

The Committee believes that the total compensation provided to the
Company's executives is reasonable and meets the philosophies and objectives of
the compensation program for the Company's executives.

Compensation Surveys and Benchmarking
From time to time, the Committee periodically reviews surveys and
benchmarking data consisting of total compensation and each of its elements:
base salary and cash incentive compensation. In determining 2007 executive
compensation, the Committee targeted executive compensation for executives, at
the lower end of the competitive range of survey data of companies from
nationally recognized executive compensation surveys.

Principal Components of Executive Compensation
In the past, executives have been primarily compensated by a combination of
base salary and discretionary incentives. The Company is deliberately moving to
a managed program more consistent with the stated compensation philosophies and
objectives. In the future, executives' total compensation will be more heavily
weighted towards performance-based, variable compensation, with annual base
salary ranging from 50% to 75% of a Named Executive's total compensation
package.

Although the Committee has not established specific ratios for each of the
principal compensation components, it strives to maintain a reasonable and
competitive balance between base salary and cash incentive compensation. For
compensation setting purposes, each executive is considered individually;
however, the same considerations apply to all executives. In setting base
salary, the primary factors are the scope of the executive's duties and
responsibilities, the executive's performance of those duties and
responsibilities, and a general evaluation of the competitive market conditions
for similar executives with each of the Company's respective executive's
experience.

The Company also compensates its executives with other customary benefits
such as medical coverage, group life insurance, travel accident insurance,
disability coverage, and a defined contribution retirement savings plan. The
Company does not provide significant perquisites or post-retirement benefits to
its executives, such as a defined benefit pension plan.

Base Salary
The Committee provides base salaries to executive officers to attract and
retain talent, provide competitive compensation for the performance of the
executives' basic job duties and responsibilities, and recognize individual
contributions to the Company's financial performance. The Committee generally
targets base salary levels to be at the lower end of the competitive range and,
therefore, base salaries are not intended to exceed the median of market data
provided by the Company's compensation consultant. Base salaries may be adjusted
at the discretion of the Board of Directors based on the recommendation of the
Committee. Based on recommendations of the CEO and the Committee's review of the
applicable compensation survey data, as discussed above, base salaries of all
executive officers for 2007 were set at levels at the lower end of the
competitive range. The Committee typically recommends and the Board of Directors
sets base salaries at these levels due to differences in revenue size among the
companies included in the published survey sources. The Committee believes that
the base salaries paid to the Company's executive officers are reasonable and
are the primary component of the Company's compensation program.

On January 1, 2006, Mr. Hoffner was hired as the Company's President and
CEO at a salary of $200,000 per annum and subsequently reduced to $155,000. The
salary paid to Mr. Hoffner was arrived at through negotiations with Mr. Hoffner
and was subsequently adjusted to be equal to the salary paid to each of Messrs.
Casey and Lehr, two of the Company's principal executives. On March 1, 2007, Mr.
Hoffner resigned from his positions as President and CEO and as a director of
the Company.

Mr. Yurkovic returned to the Company as Acting CEO on March 1, 2007 at a
base salary of $10,500 per month and is not eligible for director compensation
while in this position. The salary paid to Mr. Yurkovic was arrived at through
negotiations with Mr. Yurkovic.

Changes, if any, to base salaries for all employees generally will take
effect on March 1; however, base salaries of executives are also reviewed at the
time of a promotion or other change in responsibilities.

In connection with his change in responsibilities and promotion to Vice
President of the Company, effective November 14, 2005, Mr. Lehr received an
increase of $5,000 in base salary, bringing his base salary to $155,000. During
2007, Mr. Lehr received no increase in base salary and his base salary remains
at $155,000, the per annum rate of pay that was set on November 14, 2005.

In connection with his change in responsibilities and promotion to
Executive Vice President of the Company, effective November 14, 2005, Mr. Casey
received an increase of $15,000 in base salary, bringing his base salary to
$155,000. Also, effective March 1, 2007, in connection with his change in
responsibilities and promotion to President and Chief Operating Officer ("COO")
of SI Systems, Mr. Casey received an increase of $20,000 in base salary,
bringing his base salary to $175,000.

During 2007, Mr. Semanick received no increase in base salary and his base
salary remains at $124,373, the per annum rate of pay that was set on March 1,
2005.

Bonus Awards
While the Company implements a more managed program for executive
compensation, it has primarily utilized discretionary cash bonus awards to
recognize the contributions of selected executives based on the Board of
Directors' judgment of the executive's overall performance. When appropriate,
the Committee recommends the recipients and amounts of these discretionary cash
bonus awards each year for approval by the Board of Directors. Discretionary
cash bonuses may vary among executives, with no one executive guaranteed a
minimum cash bonus amount. There were no cash bonus awards recommended by the
Committee or approved by the Board of Directors during 2007.

Equity Awards
The Company's stock-based compensation program, the 1997 Equity
Compensation Plan ("ECP"), expired in July 2007. Prior to expiration, the ECP
provided for grants of stock options, restricted and nonvested stock, and stock
appreciation rights to selected employees, key employees who performed valuable
services, and directors of the Company. In addition, the ECP provided for grants
of performance units to employees and key advisors. There were no equity awards
granted during 2007 and no further grants are available under the plan.

As of December 31, 2007, 7,500 stock options and 7,500 shares of restricted
and nonvested stock are outstanding under the plan. All stock options have a
term of seven years from the March 8, 2006 date of grant, while the restricted
and nonvested shares of stock vest on the four-year anniversary of the March 8,
2006 date of grant.

The Committee believes that equity awards are an important component of a
compensation program because they have the effect of retaining executives and
aligning executives' financial interests with the interests of stockholders.
Prior to the expiration of the ECP, equity awards were granted from time to time
as a component of the compensation program to focus on aspects of performance
such as stock price appreciation, total return to stockholders, and increasing
longer-term value for stockholders. However, at the Annual Meeting of
Stockholders held on August 1, 2007, the stockholders of the Company did not
approve the proposed Company's 2007 Equity Incentive Plan.

Other Compensation
In addition to the compensation described above, executives named in the
Summary Compensation Table receive certain other benefits. Such benefits include
a monthly auto allowance for executives of $800 for the business usage of
personal automobiles and Company contributions under the Company's 401(k)
retirement savings plan. Participation in the Company's 401(k) retirement
savings plan and Company contributions and benefits related to the retirement
savings plan are made available to all of the Company's employees. The costs to
the Company associated with providing these benefits for executives named in the
Summary Compensation Table are reflected in the "All Other Compensation" column
of the Summary Compensation Table.

The Company also provides other benefits, such as medical coverage, group
life insurance, travel accident insurance, and disability coverage, to each
executive named in the Summary Compensation Table, which are also provided to
all of the Company's employees. The value of these benefits is not required to
be included in the Summary Compensation Table because such benefits are made
available to all employees. The Company also provides vacation and other paid
holidays to all employees, including the executives named in the Summary
Compensation Table, which are comparable to those provided by other companies.

Severance
The Company has an Executive Officer Severance Policy (the "Severance
Policy") for an executive without an employment agreement, which applies in the
event that an executive is terminated by the Company for reasons other than
"cause," as such term is defined in the Severance Policy. The Severance Policy
was established to provide a competitive benefit in order to motivate qualified
individuals to accept executive positions with the Company. Under the Severance
Policy, the CEO will receive 52 week's regular straight-time pay while the other
executives will receive one week's regular straight-time pay based on their
years of service with the Company in accordance with the following schedule:

----------------------------------------------------------------------------------------------
Severance Pay
Years of Service (Weeks)
----------------------------------------------------------------------------------------------

1 year of service or less 13 Weeks
Greater than 1 year of service, but less than 7 years of service 26 Weeks
Greater than 7 years of service, but less than 14 years of service 39 Weeks
Greater than 14 years of service or CEO of the Company 52 Weeks
----------------------------------------------------------------------------------------------

During the aforementioned severance payout period, the Company will provide
the executive continued medical coverage in accordance with the same terms
offered during employment. The Company will also provide executive outplacement
services for terminated executives. For additional information concerning the
Severance Policy, see "Potential Payments upon Termination or Change in Control"
below.

Change in Control
The Company does not have change-in-control agreements with its executives
named in the Summary Compensation Table. However, the provisions of the 1997
Equity Compensation Plan applicable to change in control apply to nonvested
stock and stock option grants issued under the Company's 1997 Equity
Compensation Plan. Upon a change in control, all nonvested shares subject to
forfeiture immediately prior to the change in control will become
non-forfeitable and the restrictions and conditions on all outstanding nonvested
stock shall immediately lapse, and all outstanding stock options shall
automatically accelerate and become fully exercisable. For additional
information concerning change in control provisions applicable to nonvested
stock and stock option grants issued under the Company's 1997 Equity
Compensation Plan, see "Potential Payments upon Termination or Change in
Control" below.

Financial Restatement
The Company does not have a formal policy regarding the effects of a
financial restatement on incentive compensation. The Company may, to the extent
permitted by applicable law, seek recoupment of incentive compensation, if
applicable, paid to any executive where the payment was predicated upon the
achievement of certain financial results that were subsequently the subject of a
restatement, the executive is found to have engaged in fraud or misconduct that
caused or partially caused the need for the restatement, and a lower payment
would have been made to the executive based upon the restated financial results.
In each such instance, the Company, to the extent practicable, may seek to
recover the amount by which the individual executive's incentive compensation
for the relevant period exceeded the payment that would have been made based on
the restated financial results.

The Company's Practices with Respect to the Granting of Equity Awards
The Company's stock-based compensation program, the 1997 Equity
Compensation Plan, expired in July 2007. No further grants are available under
the 1997 Equity Compensation Plan. Prior to the expiration of the 1997 Equity
Compensation Plan, equity awards were granted from time to time by the Board of
Directors and were based upon the recommendations of the Committee.

o Timing of Grants. Regularly scheduled meetings of the Board of
Directors generally occur in the month of the dissemination of the
Company's earnings release for the immediately preceding fiscal
quarter. From time to time, equity awards were typically granted at one
of these regularly scheduled meetings and, as a rule, further grants
were not made for the remainder of the year. On limited occasions,
grants may have occurred at other regularly scheduled meetings of the
Board of Directors during the year, primarily for approving a
compensation package for a newly hired or promoted executive. The
timing of such grants was driven solely by the activity related to the
need for the hiring or promotion; not the price of the Company's common
stock or the timing of any news release of Company information.

o Option Exercise Price. Historically, the exercise price of a newly
granted stock option was at the closing price on the American Stock
Exchange on the date of grant.

Stockholding Guidelines
The Committee also believes that it is in the best interests of
stockholders for the Company's directors and executives to own a minimum
required amount of the Company's common stock, thereby aligning their interests
with the interests of stockholders. Accordingly, on March 8, 2006, the Board of
Directors implemented stock ownership guidelines applicable for all of the
Company's directors and executives. The current stock ownership guidelines are
as follows:

o The CEO of the Company is required to own at least 15,000 shares of the
Company's common stock and all other executives and directors of the
Company are required to own at least 10,000 shares of the Company's
common stock.

o The common stock ownership requirement may be reached over a time
period not exceeding the later of (1) five years from the March 8, 2006
policy inception date, or (2) five years from the date the director or
executive begins his or her tenure as a director or executive with the
Company.

o Directors of the Company are required to make an investment in the
Company's common stock prior to or at the time of their election or
appointment to the Company's Board of Directors, as long as such
purchases do not violate the Company's insider trading policy.

Securities Trading Policy
Directors, executives, and employees of the Company may not engage in any
transaction in which they may profit from short-term speculative swings in the
value of the Company's securities. This prohibition includes "short sales"
(selling borrowed securities which the seller hopes can be purchased at a lower
price in the future) or "short sales against the box" (selling owned, but not
delivered securities), and other hedging transactions designed to minimize an
individual's risk inherent in owning the Company's common stock. In addition,
the securities trading policy is designed to ensure compliance with all insider
trading rules.

Perquisites
The Company does not provide significant perquisites to its executives, nor
does it have an executive perquisite program. The Board of Directors and the
Committee believe that providing significant perquisites to executives would not
be consistent with the Company's overall compensation philosophies and
objectives because awarding such perquisites do not necessary align an
executive's interest with long-term stockholder value.

Tax Implications of Executive Compensation
Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 in
compensation per year on the amount that the Company may deduct with respect to
each of its Named Executives. The limitation does not apply to compensation that
qualifies as "performance-based compensation" or falls within other exceptions
provided in the statute. However, the Committee retains the discretion to
approve elements of compensation for specific executives in the future that may
not be fully deductible when the Committee deems the compensation appropriate in
light of its philosophies and objectives. The Committee believes that all
compensation paid to the executives in 2007 did not exceed the deductible limit
and will be deductible for federal income tax purposes.

3. Report of the Compensation Committee
------------------------------------

The Committee has reviewed and discussed the Compensation Discussion and
Analysis for the year ended December 31, 2007 required by Item 402(b) of
Regulation S-K with management, and based on such review and discussions, the
Committee recommended to the Board that the Compensation Discussion and Analysis
for the year ended December 31, 2007 be included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2007 and in this Proxy Statement.

Current Members of the Compensation Committee: Former Member of the Compensation Committee:

Samuel L. Torrence, Chairman Anthony W. Schweiger
Theodore W. Myers
Robert J. Schwartz

Mr. Torrence became a member of the Compensation Committee in March 2007
and Chairman of the Compensation Committee in August 2007. Mr. Schweiger, a
former director of the Company, served on the Compensation Committee until his
resignation in April 2008, at which time Mr. Schwartz became a member of the
Compensation Committee.

Set forth below is certain information relating to compensation received by
the Company's Principal Executive Officer or PEO (its CEO), Principal Financial
Officer or PFO (its Chief Financial Officer), and other most highly compensated
executives of the Company in 2007 and 2006 (collectively, the "Named
Executives"). No executive has an employment agreement with the Company.

SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------------------------------------------------
Stock Option All Other
Name and Salary Bonus Awards Awards Compensation Total
Principal Positions Year ($) (1) ($) ($) (2) ($) (3) ($) (4) ($)
----------------------------------------------------------------------------------------------------------------------

Principal Executive
-------------------
Officer
-------
Leonard S. Yurkovic 2007 105,000 - - - 24,160 129,160
Acting CEO (5) 2006 - - - - - -

Principal Executive
-------------------
Officer
-------
Joel L. Hoffner 2007 38,750 - (10,427) 542 4,188 33,053
President and 2006 155,000 - 10,427 2,709 13,800 181,936
CEO (6)

Principal Financial
-------------------
Officer
-------
Ronald J. Semanick 2007 124,373 - 6,256 1,625 14,775 147,029
Vice President - 2006 124,373 5,000 5,214 1,354 14,575 150,516
Finance, Chief Financial
Officer, and Treasurer
William J. Casey 2007 172,365 - 6,256 1,625 16,045 196,291
Executive Vice 2006 155,000 10,000 5,214 1,354 15,800 187,368
President (7)
John F. Lehr 2007 155,000 - 6,256 1,625 9,600 172,481
Vice President 2006 155,000 - 5,214 1,354 9,600 171,168
----------------------------------------------------------------------------------------------------------------------

(1) This column includes employee pre-tax contributions to the Company's 401(k)
retirement savings plan.

(2) This column reflects the dollar amount recognized for financial accounting
reporting purposes for the fiscal years ended December 31, 2007 and 2006,
in accordance with SFAS No. 123(R) pursuant to the Company's 1997 Equity
Compensation Plan and, therefore, includes amounts from awards granted in
and, if applicable, prior to 2006. There were no stock awards during the
year ended December 31, 2007, and no further grants are available under the
1997 Equity Compensation Plan. These amounts reflect the Company's
accounting expense for these awards, and do not correspond to the actual
value that will be recognized by the Named Executive.

(3) This column reflects the dollar amount recognized for financial accounting
reporting purposes for the fiscal years ended December 31, 2007 and 2006,
in accordance with SFAS No. 123(R) pursuant to the Company's 1997 Equity
Compensation Plan and, therefore, includes amounts from awards granted in
and, if applicable, prior to 2006. There were no stock options granted
during the year ended December 31, 2007, and no further grants are
available under the 1997 Equity Compensation Plan. These amounts reflect
the Company's accounting expense for these awards, and do not correspond to
the actual value that will be recognized by the Named Executives. The
assumptions used in the calculation of these amounts are described in Note
5 of the Notes to Consolidated Financial Statements included in this Annual
Report on Form 10-K.

(4) This column includes the following additional compensation:

------------------------------------------------------------------------------------------------------
Company CEO Meals All Other
Auto Contributions and Lodging Compensation
Allowance to 401(k) Plan Expenses Total
Name Year ($) (a) ($) (b) ($) (c) ($)
------------------------------------------------------------------------------------------------------

Leonard S. Yurkovic 2007 8,000 4,110 12,050 24,160
2006 - - - -

Joel L. Hoffner 2007 2,400 1,788 - 4,188
2006 9,600 4,200 - 13,800

Ronald J. Semanick 2007 9,600 5,175 - 14,775
2006 9,600 4,975 - 14,575

William J. Casey 2007 9,600 6,445 - 16,045
2006 9,600 6,200 - 15,800

John F. Lehr 2007 9,600 - - 9,600
2006 9,600 - - 9,600
------------------------------------------------------------------------------------------------------

(a) This column includes monthly auto allowance of $800 for the business
usage of personal automobiles.

(b) This column includes the amounts expensed for financial reporting
purposes for Company contributions to the Company's 401(k) retirement
savings plan pertaining to basic, matching, and profit sharing
contributions. For further information, please refer to the Company's
"Employee Benefit Plans" in Note 6 of the Notes to Consolidated
Financial Statements included in this Annual Report on Form 10-K.

(c) This column includes meals and lodging expenses for Mr. Yurkovic while
away from his Maryland residence and working at the Company's
headquarters in Easton, Pennsylvania.

(5) Mr. Yurkovic rejoined the Company as Acting CEO on March 1, 2007 at a base
salary of $10,500 per month and is not eligible for director compensation
while in this position.

(6) Mr. Hoffner became President and CEO of the Company on January 1, 2006 and
resigned from his positions as President and CEO and as a director of the
Company effective March 1, 2007.

(7) Mr. Casey rejoined the Company on December 29, 2003 and became Executive
Vice President of the Company on October 14, 2005. Mr. Casey was appointed
President and COO of SI Systems effective March 1, 2007, at which time his
base salary was increased to $175,000.

------------------------------

GRANTS OF PLAN-BASED AWARDS DURING THE YEAR ENDED
DECEMBER 31, 2007
----------------------------------------------------------------------------------------------------------------------
All Other All Other Exercise
Stock Option or Grant Date
Awards: Awards: Base Fair Value
Number of Number of Price Closing of
Shares of Securities of Price on Stock and
Stock or Underlying Option Grant Option
Grant Approval Units Options Awards Date Awards
Name Date Date (#) (#) ($/Sh) ($/Sh) ($)
----------------------------------------------------------------------------------------------------------------------

Leonard S. Yurkovic - - - - - - -

Joel L. Hoffner - - - - - - -

Ronald J. Semanick - - - - - - -

William J. Casey - - - - - - -

John F. Lehr - - - - - - -
----------------------------------------------------------------------------------------------------------------------

There were no grants of plan-based awards during the year ended December 31,
2007, and no further grants are available under the 1997 Equity Compensation
Plan.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2007
---------------------------------------------------------------------------------------------------------------------
Number of Number of Market
Securities Securities Number of Value of
Underlying Underlying Shares or Shares or
Unexercised Unexercised Units of Units of
Options Options Option Stock That Stock That
(#) (#) Exercise Option Have Not Have Not
----------------------------------- Price Expiration Vested Vested
Name Exercisable (1) Unexercisable (1) ($) Date (#) (2) ($) (3)
----------------------------------------------------------------------------------------------------------------------

Leonard S. Yurkovic - - - - - -

Joel L. Hoffner - - - - - -

Ronald J. Semanick 625 1,875 10.01 3/8/13 2,500 17,275

William J. Casey 625 1,875 10.01 3/8/13 2,500 17,275

John F. Lehr 625 1,875 10.01 3/8/13 2,500 17,275
---------------------------------------------------------------------------------------------------------------------

(1) This column includes the stock options awarded on March 8, 2006 under the
Company's 1997 Equity Compensation Plan. The options have a term of seven
years and vest in four equal annual installments beginning on the first
anniversary of the date of grant. Thus, at the end of four years the
options are fully exercisable. Due to his resignation from the Company
effective March 1, 2007, Mr. Hoffner forfeited his 5,000 stock options.

(2) This column includes the nonvested stock awarded on March 8, 2006 under the
Company's 1997 Equity Compensation Plan. The nonvested stock grants vest on
March 8, 2010, the four-year anniversary of the date of grant. Due to his
resignation from the Company effective March 1, 2007, Mr. Hoffner forfeited
his 5,000 shares of nonvested stock.

(3) The market value of shares of stock that have not vested was based on the
closing market price of the Company's common stock on December 31, 2007 of
$6.91 per share.

OPTION EXERCISES AND STOCK VESTED IN THE YEAR ENDED
DECEMBER 31, 2007
--------------------------------------------------------------------------------------------------------------------
Option Awards Stock Awards
-------------------------------------------- -------------------------------------------
Name Number of Shares Value Realized Number of Shares Value Realized
Acquired on Exercise on Exercise Acquired on Vesting on Vesting
(#) ($) (#) ($)
--------------------------------------------------------------------------------------------------------------------

Leonard S. Yurkovic - - - -

Joel L. Hoffner - - - -

Ronald J. Semanick - - - -

William J. Casey - - - -

John F. Lehr - - - -
--------------------------------------------------------------------------------------------------------------------

There were no stock options exercised or vesting of stock awards during the year
ended December 31, 2007.

PENSION BENEFITS TABLE
----------------------------------------------------------------------------------------------------------
Present Value
Number of Years of Accumulated Payments During Last
Plan Credited Service Benefit Fiscal Year
Name Name (#) ($) ($)
----------------------------------------------------------------------------------------------------------

This table has been omitted because it is not applicable to the Company
and its Named Executives.

----------------------------------------------------------------------------------------------------------

NONQUALIFIED DEFERRED COMPENSATION TABLE
---------------------------------------------------------------------------------------------------------------------------------
Registrant Aggregate
Executive Contributions in Earnings Aggregate
Contributions Last in Last Fiscal Withdrawals/ Aggregate Balance at
in Last Fiscal Year Fiscal Year Year Distributions Last Fiscal Year-End
Name ($) ($) ($) ($) ($)
---------------------------------------------------------------------------------------------------------------------------------

This table has been omitted because it is not applicable to the Company
and its Named Executives.

---------------------------------------------------------------------------------------------------------------------------------

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE
AS OF DECEMBER 31, 2007

The information below describes and estimates certain compensation that
would become payable under existing plans and arrangements if the Named
Executive's employment had terminated on December 31, 2007, given the Named
Executive's compensation and, if applicable, based on the Company's closing
stock price on that date. These benefits are in addition to benefits available
generally to non-executive employees such as Company contributions under the
Company's 401(k) retirement savings plan and accrued vacation pay.

-----------------------------------------------------------------------------------------------------------------------------------
Before Change After Change
in Control in Control
------------------------------------
Termination Termination
w/o Cause or w/o Cause or
for Good for Good Change in
Name Benefit Reason Reason Control
-----------------------------------------------------------------------------------------------------------------------------------

Leonard S. Yurkovic (1) Severance pay $ - $ - $ -
Outplacement services - - -
Health care benefits continuation - - -
Value of nonvested stock subject
to acceleration - - -
Value of stock options subject
to acceleration - - -

Joel L. Hoffner (2) Severance pay - - -
Outplacement services - - -
Health care benefits continuation - - -
Value of nonvested stock subject
to acceleration - - - (3)
Value of stock options subject
to acceleration - - - (4)

Ronald J. Semanick Severance pay 124,373 124,373 -
Outplacement services 10,000 10,000 -
Health care benefits continuation 4,874 4,874 -
Value of nonvested stock subject
to acceleration - - 17,275 (3)
Value of stock options subject
to acceleration - - - (4)

William J. Casey Severance pay 175,000 175,000 -
Outplacement services 10,000 10,000 -
Health care benefits continuation 10,868 10,868 -
Value of nonvested stock subject
to acceleration - - 17,275 (3)
Value of stock options subject
to acceleration - - - (4)

John F. Lehr Severance pay 77,500 77,500 -
Outplacement services 10,000 10,000 -
Health care benefits continuation 4,781 4,781 -
Value of nonvested stock subject
to acceleration - - 17,275 (3)
Value of stock options subject
to acceleration - - - (4)
-----------------------------------------------------------------------------------------------------------------------------------

Item 11. Executive Compensation (Continued)
----------------------

(1) Mr. Yurkovic is not eligible for termination benefits per his employment
arrangement with the Company.

(2) Mr. Hoffner resigned from his positions as President and CEO and as a
director of the Company effective March 1, 2007 and is no longer
eligible for termination benefits.

(3) On March 8, 2006, the Compensation Committee awarded nonvested stock
under the 1997 Equity Compensation Plan to Messrs. Hoffner (5,000
shares), Semanick (2,500 shares), Casey (2,500 shares), and Lehr (2,500
shares). The value associated with the accelerated vesting of nonvested
stock has been determined based on the closing market price of the
Company's common stock on December 31, 2007 of $6.91 per share. Due to
his resignation from the Company effective March 1, 2007, Mr. Hoffner
forfeited his 5,000 shares of nonvested stock.

(4) The closing market price of the Company's common stock on December 31,
2007 was $6.91 per share, while the exercise price of outstanding stock
options is $10.01 per share. Therefore, the stock options are
not-in-the-money at December 31, 2007 and would not provide any
additional value to the Named Executives. Due to his resignation from
the Company effective March 1, 2007, Mr. Hoffner forfeited his 5,000
stock options.

------------------------------

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

On September 20, 2005, the Board of Directors of the Company, upon the
recommendation of the Board's Nominating Committee, unanimously voted to elect
Mr. Joel L. Hoffner as a Director of the Company to fill the vacancy created by
the resignation of Mr. Steven Shulman on August 8, 2005. Mr. Hoffner had been a
consultant to SI Handling Systems, Inc. and Paragon Technologies for various
marketing and business evaluation assignments from 1995 through 2005. From
September 1, 2005 through December 31, 2005, Mr. Hoffner provided consulting
services related to the Company's corporate development pursuant to the terms of
a consulting agreement by and between the Company and The QTX Group dated
September 1, 2005. In consideration for their services, The QTX Group received
$7,500 per month and reimbursement for all reasonable and necessary
out-of-pocket expenses directly incurred by Mr. Hoffner during the term of his
engagement with the Company. The parties terminated the consulting agreement
with The QTX Group on January 1, 2006, the time Mr. Hoffner's appointment as
President and Chief Executive Officer of the Company became effective.
Consulting expenses associated with The QTX Group in the year ended December 31,
2005 approximated $44,000. Mr. Hoffner resigned from his positions as President
and CEO and as a director of the Company effective March 1, 2007.

On November 15, 2005, the Company announced the repurchase of 100,000
shares (or 2.67%) of its common stock in a private sale transaction for $975,000
(or $9.75 per share) from L. Jack Bradt, a member of the Company's Board of
Directors at the time of the transaction. The Company's non-interested Audit
Committee members and the Board of Directors approved the repurchase of Mr.
Bradt's shares. The closing market price of the Company's common stock on
November 14, 2005 was $10.09 per share.

------------------------------

Stock Performance Chart
-----------------------

The following graph illustrates the cumulative total stockholder return on
the Company's common stock during the years ended December 31, 2007, December
31, 2006, December 31, 2005, December 31, 2004, and December 31, 2003 with
comparison to the cumulative total return on the Amex Composite Index, and a
Peer Group of Construction and Related Machinery Companies. This comparison
assumes $100 was invested on December 31, 2002 in the Company's common stock and
in each of the foregoing indexes and assumes reinvestment of dividends.

[STOCK PERFORMANCE CHART]

12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07
-------- -------- -------- -------- -------- --------

Paragon Technologies, Inc. 100 115 117 117 66 82
(1) Peer Group 100 139 180 299 287 364
Amex Composite Index 100 143 175 215 257 299

-----------------------------------

(1) The self-constructed Peer Group of Construction and Related Machinery
Companies includes: A.S.V., Inc., Bolt Technology Corporation, Columbus
McKinnon Corporation, Industrial Rubber Products, Inc., Lufkin Industries,
Inc., Quipp, Inc., and Tesco Corporation. The total returns of each member
of the Peer Group were determined in accordance with Securities and
Exchange Commission regulations; i.e., weighted according to each such
issuer's stock market capitalization.

------------------------------

INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

Selection of the independent registered public accountants is made solely
by the Audit Committee. KPMG LLP ("KPMG") served as the Company's independent
registered public accountants for 2007 and 2006. A representative of KPMG is
expected to be present at the Annual Meeting of Stockholders and will have an
opportunity to respond to appropriate questions of stockholders and make a
statement if desired to do so.

Fees for all services provided by KPMG for the fiscal years ended December
31, 2007 and 2006 were as follows:

-------------------------------------------------------------------------------------------------
Category of Services 2007 2006
-------------------------------------------------------------------------------------------------

Audit fees (1) $ 166,800 129,800
Audit-related fees (2) - -
------------------- ------------------
Total audit and audit-related fees 166,800 129,800
Tax fees (3) 64,000 68,150
All other fees (4) - -
------------------- ------------------
Total fees $ 230,800 197,950
=================== ==================
-------------------------------------------------------------------------------------------------

(1) Audit Fees
----------
This category includes fees for professional services rendered in
connection with the audit of financial statements included in the Company's
Form 10-K and review of financial statements included in the Company's
Forms 10-Q and all other SEC regulatory filings.

(2) Audit-Related Fees
------------------
KPMG did not provide audit-related services for the Company in 2007 and
2006.

(3) Tax Fees
--------
This category includes fees for services rendered in 2007 and 2006 in
connection with tax compliance and tax consultation services related to the
Company's annual federal and state tax returns.

(4) All Other Fees
--------------
No other fees were charged by KPMG to the Company in 2007 and 2006 other
than those referenced above.

Fee Approval Policy
-------------------
In accordance with the Company's Audit Committee Charter, the Audit
Committee approves in advance any and all audit services, including audit
engagement fees and terms, and non-audit services provided to the Company by its
independent registered public accountants (subject to the de minimus exception
for non-audit services contained in Section 10A(i)(1)(B) of the Securities
Exchange Act of 1934, as amended), all as required by applicable law or listing
standards. The independent registered public accountants and the Company's
management are required to periodically report to the Audit Committee the extent
of services provided by the independent registered public accountants and the
fees associated with these services. Specific services being provided by the
Company's independent registered public accountants are regularly reviewed in
accordance with the pre-approval policy. All services rendered by KPMG are
permissible under applicable laws and regulations, and the Audit Committee
pre-approved all audit, audit-related, and non-audit services performed by KPMG
during 2007.

------------------------------

2009 STOCKHOLDER PROPOSALS

Appropriate stockholder proposals and nominations of directors which are
intended to be presented at the 2009 Annual Stockholders' Meeting must be
received by the Company no later than March 6, 2009, in order to be included in
the 2009 proxy materials.

With respect to stockholder proposals and nominations of directors not
included in the Company's proxy statement, the stockholder must give advance
notice to the Company prior to the deadline for such meeting determined in
accordance with the Bylaws (the "Bylaw Deadline"). Under the Company's Bylaws,
in order to be deemed properly presented, notice must be delivered to the
Secretary of the Company at the principal executive offices of the Company no
less than 90 days nor more than 120 days prior to the first anniversary of the
preceding year's Annual Meeting. If the date of next year's Annual Meeting is
earlier than July 9, 2009 or later than October 7, 2009, however, your written
notice of intent must be delivered between the 120th day before next year's
Annual Meeting and the later of the 90th day before next year's Annual Meeting,
or the 10th day after the Company's first public announcement of next year's
Annual Meeting date. The stockholder's notice must set forth the information
required by the Bylaws.

If the Board of Directors decides to propose, for next year's Annual
Meeting, an increase in the number of directors, the advance notice requirements
will differ from those described above solely with respect to nominations of
individuals for the new position(s) created by the increase if we fail to make a
timely public announcement of the proposal. The Company's public announcement
must be made as described in the Company's Bylaws. To be considered timely, the
Company's first public announcement of such a proposal must be made at least 70
days prior to the first anniversary of the preceding year's Annual Meeting. If
the Company fails to meet the applicable deadline for making a timely public
announcement and you would like to nominate individuals for the new position(s)
created by the increase, you must deliver your written notice of intent by no
later than the 10th day after the Company's first public announcement. Your
written notice of intent may nominate individuals only for new position(s)
created by the increase, and must contain the information required by the
Bylaws.

The Company may utilize discretionary authority conferred by proxy voting
on any proposals not included in the Company's proxy if the stockholder does not
give the Company notice of such matter by May 20, 2009. Proxy proposals are to
be sent to the attention of Corporate Secretary, Paragon Technologies, Inc., 600
Kuebler Road, Easton, PA 18040.

------------------------------

SECTION 16(a) -- BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who beneficially own more than 10%
of the Company's common stock (collectively, the "reporting persons") to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and to furnish the Company with copies of these reports. Based on the
Company's records and other information, the Company believes that in 2007 all
of the Company's directors and executive officers met all applicable Section
16(a) filing requirements.

------------------------------

OTHER MATTERS

Expenses of Solicitation
------------------------

The Company may pay brokers, nominees, fiduciaries, or other custodians for
their reasonable expenses in sending proxy materials to, and obtaining
instructions from, persons for whom they hold stock of the Company. The Company
expects to solicit proxies primarily by mail, but directors, officers, and
regular employees of the Company may also solicit in person, by telephone,
telegraph, or telefax.

Code of Conduct
---------------

The Company has a Code of Business Conduct and Ethics which can be viewed
on the Company's website at www.ptgamex.com. The Company requires all employees,
officers, and directors to adhere to this Code in addressing the legal and
ethical issues encountered in conducting their work. The Code of Business
Conduct and Ethics requires that the Company's employees avoid conflicts of
interest, comply with all laws and other legal requirements, conduct business in
an honest and ethical manner, and otherwise act with integrity and in the
Company's best interests. The Company's Code of Business Conduct and Ethics is
intended to comply with Item 406 of the SEC's Regulation S-K and the rules of
the American Stock Exchange.

The Code of Business Conduct and Ethics includes procedures for reporting
violations of the Code, which are applicable to all employees. The
Sarbanes-Oxley Act of 2002 requires companies to have procedures to receive,
retain, and treat complaints received regarding accounting, internal accounting
controls, or auditing matters and to allow for the confidential and anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters. The Code of Business Conduct and Ethics also includes these
required procedures.

Other Items of Business
-----------------------

As of the date of this Proxy Statement, management has no knowledge of any
matters to be presented at the Annual Meeting of Stockholders other than those
referred to above. If any other matters properly come before the Annual Meeting
of Stockholders, the persons named in the accompanying form of proxy intend to
vote such proxy in accordance with their best judgment.

THE COMPANY WILL PROVIDE WITHOUT CHARGE, ON THE WRITTEN REQUEST OF ANY
STOCKHOLDER, A COPY OF ITS ANNUAL REPORT ON FORM 10-K, FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 2007. REQUESTS SHOULD BE
DIRECTED TO THE CORPORATE SECRETARY, PARAGON TECHNOLOGIES, INC., 600 KUEBLER
ROAD, EASTON, PA 18040.

------------------------------

Appendix A
----------

PARAGON TECHNOLOGIES, INC.
BOARD OF DIRECTORS

COMPENSATION COMMITTEE CHARTER

I. PURPOSE

The primary function of the Compensation Committee is to assist the
Board of Directors (the "Board") in fulfilling its oversight responsibilities
with respect to all types of compensation of the directors, officers, and
employees of the Corporation.

The Compensation Committee's compensation policies with respect to the
Corporation's executive officers are based on the principles that compensation
should, to a significant extent, be reflective of the financial performance of
the Corporation, align the interests of the Corporation's management with the
interests of its stockholders, and that a portion of executive officers'
compensation should provide long-term incentives. The Compensation Committee
seeks to have executive compensation set at levels that are sufficiently
competitive so that the Corporation may attract, retain, and motivate high
quality executives to contribute to the Corporation's success. In assessing
overall compensation for executive officers, the Compensation Committee
considers the Corporation's performance and industry position, general industry
data, and the recommendations of third-party consultants.

II. COMPOSITION

The Compensation Committee consists of two or more independent members
of the Board of Directors. Every member of the Compensation Committee shall be
an "outside director" as such term is used in U.S. Internal Revenue Regulation
1.162-27 (e), as modified or supplemented from time to time; provided, that one
(but no more than one) member of the Compensation Committee may be a
non-independent director, provided that the Board determines the appointment of
such non-independent director to the Compensation Committee is in the best
interests of the Corporation and its stockholders, and the Board discloses the
reasons for that determination in the Corporation's next annual proxy statement.

The members of the Compensation Committee shall be elected by the Board
at the annual organizational meeting of the Board and shall serve until their
successors shall be duly elected and qualified. Unless a Chairman of the
Compensation Committee is elected by the full Board, the members of the
Compensation Committee may designate a Chairman of the Compensation Committee by
majority vote of the full Compensation Committee Membership.

III. MEETINGS

The Compensation Committee shall meet at least two times annually, or
more frequently as circumstances dictate. A majority of the members of the
Compensation Committee shall constitute a quorum for the transaction of
business. Minutes of each meeting of the Compensation Committee should be
recorded by the Secretary to the Compensation Committee. Approval by a majority
of the members present at a meeting at which a quorum is present shall
constitute approval by the Compensation Committee.

A-1

The Compensation Committee may also act by unanimous written consent without a
meeting. The Compensation Committee should meet at least annually with the Chief
Executive Officer of the Corporation.

IV. RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties, the Compensation Committee
shall:

A. coordinate the Board's role in establishing performance criteria for
the Chief Executive Officer and evaluate his performance annually;

B. review and recommend to the Board the annual salary, bonus, equity
awards, stock options, and other benefits, direct and indirect, of the
Corporation's Chief Executive Officer;

C. review the salaries, bonuses, and benefits of the Corporation's
executives, as established by the Chief Executive Officer, and, upon the
recommendation of the Chief Executive Officer and taking into consideration such
other factors as the Committee believes appropriate, recommend to the Board
equity awards, stock options, and other incentive compensation for Corporation
employees;

D. review and recommend to the Board the terms of any employment
agreement executed by the Corporation with an executive officer of the
Corporation;

E. review and recommend to the Board new executive compensation
programs; review annually the operation of the Corporation's executive
compensation programs to determine whether they are properly coordinated and
achieving their intended purpose(s); establish and periodically review policies
for the administration of executive compensation programs; and take steps to
ensure that the Corporation's executive compensation programs comport with the
Compensation Committee's compensation philosophy stated above;

F. assess succession planning for the Corporation's Chief Executive
Officer; and

G. review and recommend to the Board the appropriate structure and
amount of compensation for the members of the Board.

V. REPORTING RESPONSIBILITY

The minutes of the Compensation Committee reflecting, among other
things, all actions taken by the Compensation Committee, shall be distributed to
the Board at the next Board meeting following the meeting of the Compensation
Committee that is the subject of such minutes.

In addition, matters within the responsibility of the Compensation
Committee may be discussed by the full Board from time to time during the course
of the year.

A-2

Appendix B
----------

PARAGON TECHNOLOGIES, INC.
BOARD OF DIRECTORS

NOMINATING COMMITTEE CHARTER

I. ORGANIZATION

Membership
----------

The Nominating Committee shall consist of two or more independent
directors, in accordance with Securities and Exchange Commission
("SEC") and American Stock Exchange ("AMEX") rules. In addition to the
independent directors, if the Nominating Committee consists of three or
more directors, at least two of whom are independent, the Nominating
Committee may include one member who is not independent pursuant to
AMEX rules.

Membership on the Nominating Committee shall be determined annually by
the Board upon the recommendation of the Nominating Committee. Unless a
Chairman of the Nominating Committee is elected by the full Board, the
members of the Nominating Committee may designate a Chairman of the
Nominating Committee by majority vote of the full Nominating Committee
Membership. A Secretary of the Nominating Committee shall be selected
by the Chairman of the Nominating Committee. Should any member of the
Nominating Committee cease to be independent, such member shall
immediately resign his or her membership on the Nominating Committee.
The Board of Directors may remove a member of the Nominating Committee.
In case of a vacancy on the Nominating Committee, the Board may appoint
an independent director to fill the vacancy for the remainder of the
term.

Meetings
--------

The Nominating Committee shall meet at least once each year. Additional
meetings may be scheduled as needed and may be called by the Chairman
of the Nominating Committee. A majority of the members of the
Nominating Committee shall constitute a quorum for the transaction of
business. Minutes shall be recorded by the Secretary to the Nominating
Committee. Approval by a majority of the members present at a meeting
at which a quorum is present shall constitute approval by the
Nominating Committee. The Nominating Committee may also act by
unanimous written consent without a meeting.

II. BASIC FUNCTION AND PURPOSE

The Nominating Committee shall recommend the nomination of Company
directors to be nominated by the Board of Directors for election by the
stockholders. In the case of vacancies to the Board, the Nominating
Committee shall recommend the nomination of directors to be elected by
the Board.

III. RESPONSIBILITIES

The Nominating Committee, in consultation with the Chairman of the
Board and the Chief Executive Officer, shall:

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1. Review and make recommendations on the range of skills and
expertise which should be represented on the Board, and the
eligibility criteria for individual Board and committee
membership. In the case of potential independent director
candidates, such eligibility criteria shall be in accordance
with SEC and AMEX rules.

2. Review and recommend to the Board the appropriate structure of
the Board.

3. Identify and recommend potential candidates for election or
re-election to the Board.

4. Develop policies and procedures for consideration of Board
nominees recommended by stockholders.

5. Have sole authority to retain and terminate any search firm to
be used to identify director candidates, including sole
authority to approve the search firm, fees, and other
retention terms.

6. Review and recommend to the Board the appropriate structure of
Board committees, recommend committee assignments, and the
position of chairman of each committee. Review and make
recommendations to the Board on the Company's efforts to
promote diversity among directors.

7. Have authority to delegate any of its responsibilities to
subcommittees or individuals as the Nominating Committee deems
appropriate.

8. Have authority to obtain advice and assistance from internal
and external legal, accounting, or other advisors.

9. Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.

10. Annually evaluate its own performance.

The Nominating Committee's authority and responsibilities shall not
deprive the right to determine nominations where that right legally
belongs to a third party.

IV. REPORTING RESPONSIBILITY

All action taken by the Nominating Committee shall be reported to the
Board at the next Board meeting following such action.

In addition, nomination matters may be discussed in executive session
with the full Board during the course of the year.

B-2

Appendix C
----------

PARAGON TECHNOLOGIES, INC.
BOARD OF DIRECTORS

AUDIT COMMITTEE CHARTER

I. PURPOSE

The primary function of the Audit Committee is to assist the
Board of Directors in fulfilling its oversight responsibilities by reviewing: 1)
the financial reports and other financial information provided by the
Corporation to any governmental body or the public; 2) the Corporation's systems
of internal controls regarding finance, accounting, legal compliance, and ethics
that management and the Board have established; and 3) the Corporation's
accounting, financial, and business reporting processes generally. Consistent
with this function, the Audit Committee should encourage continuous improvement
of, and should foster adherence to, the Corporation's policies, procedures, and
practices at all levels. The Audit Committee's primary duties and
responsibilities are to:

A. Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control systems.

B. Review and appraise the audit efforts of the Corporation's
independent auditors.

C. Provide an open avenue of communication among the independent
auditors, financial, and senior management, and the Board of Directors.

The Audit Committee does not plan or conduct audits, prepare
the Corporation's financial statements, nor does it determine that the
Corporation's financial statements and disclosures are complete, accurate, and
in accordance with U.S. generally accepted accounting principles and applicable
rules and regulations. These functions are the responsibility of Corporation
management and the independent auditor.

The Audit Committee will primarily fulfill these
responsibilities by carrying out the activities enumerated in Section IV of this
Charter.

II. COMPOSITION

The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall (i) be free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Audit Committee,
(ii) meet the independence requirements of Section 10A(m)(3) of the Securities
and Exchange Act of 1934 (the "Exchange Act") and the rules and regulation of
the Commission, (iii) meet the independence and financial literacy requirements
of the listing standards of the American Stock Exchange, as modified or
supplemented from time to time. If a member of the Audit Committee ceases to be
independent in accordance with the requirements of the Exchange Act and the
corresponding provisions of the listing standards of the American Stock Exchange
for reasons outside the member's reasonable control, that person, with prompt
notice to the Exchange, may remain an audit committee member in accordance with
the listing standards of the American Stock Exchange. All members of the Audit
Committee shall be able to read and understand fundamental financial statements,
including balance sheets, income statements, and cash flow statements, and at
least one member of the

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Audit Committee shall be financially sophisticated as defined in the listing
standards of the American Stock Exchange. Audit Committee members may enhance
their familiarity with finance and accounting by participating in educational
programs conducted by the Corporation or an outside consultant. Audit Committee
members shall not simultaneously serve on the audit committees of more than two
other public companies.

The members of the Audit Committee shall be elected by the
Board at the annual organizational meeting of the Board and shall serve until
their successors shall be duly elected and qualified. Unless a Chairman of the
Audit Committee is elected by the full Board, the members of the Audit Committee
may designate a Chairman of the Audit Committee by majority vote of the full
Committee Membership.

III. MEETINGS

The Audit Committee shall meet on at least a quarterly basis,
or more frequently as circumstances dictate. A majority of the members of the
Audit Committee shall constitute a quorum for the transaction of business.
Minutes of each meeting of the Audit Committee should be recorded by the
Secretary to the Audit Committee. Approval by a majority of the members present
at a meeting at which a quorum is present shall constitute approval by the Audit
Committee. The Audit Committee may also act by unanimous written consent without
a meeting. As part of its job to foster open communication, the Audit Committee
should meet at least annually with management and the independent auditors in
separate executive sessions to discuss any matters that the Audit Committee or
each of these groups believe should be discussed privately. In addition, the
Audit Committee or at least its Chairman, or his designee, should meet with the
independent auditors and management quarterly to review the Corporation's
financials consistent with Section IV.4. below. The Audit Committee may request
any officer or employee of the Corporation or the Corporation's outside counsel
or independent auditor to attend a meeting of the Audit Committee or to meet
with any members of, or consultants to, the Audit Committee.

IV. RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties, the Audit
Committee shall:

Documents/Reports Review
------------------------

1. Review and update this Charter periodically, at least
annually, as conditions dictate.

2. Review the Corporation's annual financial statements and
any reports or other financial information submitted to any governmental body,
or the public, including any certification, report, opinion, or review rendered
by the independent auditors.

3. Review with financial management and the independent
auditors the Form 10-Q and Form 10-K prior to its filing or prior to the release
of earnings. The Chairman of the Audit Committee, or his designee, may represent
the entire Audit Committee for purposes of this review.

4. Discuss with management the Corporation's earnings press
releases as well as financial information and earnings guidance provided to
analysts and rating agencies. Such discussion may be done generally (consisting
of discussing the types of information to be disclosed and the types of
presentations to be made).

C-2

5. Review disclosures made to the Audit Committee by the
Corporation's CEO and CFO during their certification process for the Form 10-K
and Form 10-Q about any significant deficiencies in the design or operation of
internal controls or material weaknesses therein and any fraud involving
management or other employees who have a significant role in the Corporation's
internal controls.

Independent Auditors
--------------------

6. The Audit Committee shall have the sole authority to
appoint or replace the independent auditor (subject, if applicable, to
stockholder ratification). The Audit Committee shall be directly responsible for
the compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor
regarding financial reporting) for the purpose of preparing or issuing an audit
report or related work. The independent auditor shall report directly to the
Audit Committee.

7. The Audit Committee shall pre-approve all auditing
services and permitted non-audit services (including the fees and terms thereof)
to be performed for the Corporation by its independent auditor, subject to the
de minimus exceptions for non-audit services described in Section 10A(i)(1)(B)
of the Exchange Act which are approved by the Audit Committee prior to the
completion of the audit. The Audit Committee may form and delegate authority to
subcommittees consisting of one or more members when appropriate, including the
authority to grant pre-approvals of audit and permitted non-audit services,
provided that decisions of such subcommittee to grant pre-approvals shall be
presented to the full Audit Committee at its next scheduled meeting.

8. Review and discuss reports from the independent auditors
on:

a. All critical accounting policies and practices
to be used.

b. All alternative treatments of financial
information within U.S. generally accepted accounting
principles that have been discussed with management, ramifications of the use of
such alternative disclosures and treatments, and the treatment preferred by the
independent auditor.

c. Other material written communications between
the independent auditor and management, such as any
management letter or schedule of unadjusted differences.

9. Review the independence, performance, and qualifications
of the independent auditors at least annually. As part of such review, the Audit
Committee shall obtain and review a report from the independent auditors at
least annually regarding:

a. the independent auditors' internal
quality-control procedures,

b. any material issues raised by the most recent
internal quality-control review, or peer review, of
the firm, or by any inquiry or investigation by governmental or professional
authorities within the preceding five years respecting one or more independent
audits carried out by the firm, and

c. any steps taken to deal with any such issues.

C-3

10. Require the independent auditors to submit annually to
the Audit Committee a formal written statement, delineating all relationships
between the independent auditors and the Corporation in accordance with
Independence Standards Board (ISB) Standard No. 1. Actively engage in a dialogue
with the independent auditors about any relationships or services that could
impact their objectivity and independence. Take appropriate action in response
to the independent auditors' report regarding their independence.

11. Periodically consult with the independent auditors, out
of the presence of management, about internal controls and the fullness and
accuracy of the Corporation's financial statements.

12. Ensure the rotation of the lead (or coordinating) audit
partner having primary responsibility for the audit and the audit partner
responsible for reviewing the audit as required by law.

13. Recommend to the Board policies for the Corporation's
hiring of employees or former employees of the independent auditor who
participated in any capacity in the audit of the Corporation.

Financial Reporting Processes
-----------------------------

14. In consultation with the independent auditors, review the
integrity of the Corporation's financial reporting processes, both internal and
external.

15. Consider the independent auditors' judgments about the
quality and appropriateness of the Corporation's accounting principles as
applied in its financial reporting.

16. Consider and approve, if appropriate, major changes to
the Corporation's auditing and accounting principles and practices as suggested
by the independent auditors or management.

Process Improvement and Business Controls
-----------------------------------------

17. Establish regular and separate systems of reporting to
the Audit Committee by each of management and the independent auditors regarding
any significant judgments made in management's preparation of the financial
statements, and the view of each as to appropriateness of such judgments.

18. Following completion of the annual audit, review
separately with each of management and the independent auditors any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of work or access to required information.

19. Review any significant disagreement among management and
the independent auditors in connection with the preparation of the financial
statements.

20. Review with the independent auditors and management the
extent to which changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented. (This review should be
conducted at an appropriate time subsequent to implementation of changes or
improvements, as decided by the Audit Committee.)

21. Establish regular and separate systems of reporting to
the Audit Committee by management regarding controls and operations of the
Corporation's business units, if applicable, with particular emphasis on risk
and profitability.

C-4

22. Establish procedures for the receipt, retention, and
treatment of complaints received by the Corporation regarding accounting,
internal accounting controls or auditing matters, and the confidential,
anonymous submission by employees of concerns regarding questionable accounting
or auditing matters.

Ethical and Legal Compliance
----------------------------

23. Establish, review, and update periodically a Code of
Business Conduct and Ethics, and ensure that management has established a system
to enforce this Code.

24. Review management's monitoring of the Corporation's
compliance with the Corporation's Code of Business Conduct and Ethics, and
ensure that management has the proper review system in place to ensure that
Corporation's financial statements, reports, and other financial information
disseminated to governmental organizations and the public satisfy legal
requirements.

25. Review with the Corporation's counsel, legal compliance
matters, including corporate securities trading policies.

26. Review with the Corporation's counsel, any legal matter
that could have a significant impact on the Corporation's financial statements.

27. Perform any other activities consistent with this
Charter, the Corporation's Bylaws and governing law, as the Audit Committee or
the Board deems necessary or appropriate.

28. The Audit Committee shall have the authority, to the
extent it deems necessary or appropriate, to retain independent legal,
accounting, or other advisors. The Corporation shall provide for appropriate
funding, as determined by the Audit Committee, for payment of compensation to
the independent auditor for the purpose of rendering or issuing an audit report
and to any advisors employed by the Audit Committee.

29. Review and approve any transactions between the
Corporation and its officers, directors, or 5% stockholders which would be
reportable in the Corporation's proxy statement.

V. REPORTING RESPONSIBILITY

The minutes of the Audit Committee reflecting, among other
things, all actions taken by the Audit Committee, shall be distributed to the
Board at the next Board meeting following the meeting of the Audit Committee
that is the subject of such minutes.

The Audit Committee shall prepare the report required by the
rules of the Securities and Exchange Commission to be included in the
Corporation's annual proxy statement.

In addition, matters within the responsibility of the Audit
Committee may be discussed by the full Board from time to time during the course
of the year.

C-5

ANNUAL MEETING OF STOCKHOLDERS OF
PARAGON TECHNOLOGIES, INC.
August 8, 2008

Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.

Please detach along perforated line and mail in the envelope provided.

------------------------------------------------------------------------------------------------------------------------------------

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|

------------------------------------------------------------------------------------------------------------------------------------

1. ELECTION OF DIRECTORS: 2. In their discretion, the Proxies are authorized
to vote upon such other matters as may properly
NOMINEES: come before the meeting or at any adjournments
/__/ FOR ALL NOMINEES thereof.
/__/ Ronald J. Izewski
/__/ Theodore W. Myers FOR AGAINST ABSTAIN
/__/ WITHHOLD AUTHORITY /__/ Robert J. Schwartz /__/ /__/ /__/
FOR ALL NOMINEES /__/ Samuel L. Torrence
/__/ Leonard S. Yurkovic

/__/ FOR ALL EXCEPT
(See instructions below)
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.

INSTRUCTION: To withhold authority to vote for any individual nominee(s),
----------- mark "FOR ALL EXCEPT" and fill in the circle next to each
nominee you wish to withhold as shown here: / X /
---
-------------------------------------------------------------------------

MARK "X" HERE IF YOU PLAN TO ATTEND THE MEETING. /_/

-------------------------------------------------------------------------
To change the address on your account, please check the box at |_| right /__/
and indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
-------------------------------------------------------------------------

---------------- ---------- ---------------- ----------
Signature of Stockholder Date: Signature of Stockholder Date:
---------------- ---------- ---------------- ----------

NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When
signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.

PARAGON TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Theodore W. Myers and Ronald J.
Semanick, or either of them acting in the absence of the other, as proxy
holders, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side, all shares of
common stock of Paragon Technologies, Inc., held of record by the undersigned on
June 20, 2008, at the Annual Meeting of Stockholders to be held on August 8,
2008, at 9:30 a.m., local time, or at any adjournments thereof.

This proxy when properly executed will be voted in the manner directed on the
reverse side. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF DIRECTORS. This proxy may be voted, in the discretion of the proxy holders,
upon such other business as may properly come before the Annual Meeting of
Stockholders or any adjournments thereof. The Board of Directors does not
presently know of any other matters to be presented at the Annual Meeting of
Stockholders.

Please vote and sign on the other side. No postage is required if this proxy is
returned in the enclosed envelope and mailed in the United States.

(Continued and to be signed on the reverse side)